Four European countries ban short selling

12th August 2011

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but as the The Financial Times (paywall) reported they have failed to convince other regulators to go along with a European Union-wide prohibition.

The Guardian reported that the decision was made by the European Securities and Markets Authority.

"Some authorities have decided to impose or extend existing short-selling bans in their respective countries," it said in a statement last night.

"They have done so either to restrict the benefits that can be achieved from spreading false rumours or to achieve a regulatory level playing field, given the close interlinkage between some EU markets."

However, the bourses failed to convince other markets such as the UK to introduce a similar ban.

"It is the worst thing to do right now. This would signal to the market that there may be something fundamentally bad that is happening," Abraham Lioui, a professor at the Edhec business school in France, told the Financial Times.